strohem

I last "plunged" on October 5... by covering short positions and buying back puts. I can't say I'd ever hand over my money to Jesse Livermore. I have read his (auto) biography. My 16 year old son would even call him "mental." It is clear to see he was bipolar and self-destructive. I'm pleased with my +23.59% YTD performance in 2011.

That is precisely what the author in my second example above stated. She had learned too much and that "it was twisting my brain into knots" and that it was a result of her "compulsive curiosity and natural intensity", traits she felt were both her best and worst. S

The "Lehman Sisters" link was interesting. I disagree that women are better and I don't subscribe to the intuitive trading line of reasoning. In my third decade now, I've seen a remarkable difference in the temperaments of clients and trading acquaintances, be they men OR women (as was pointed out a few times already). Some people are wired properly for trading - others are not. Trading has a life-long learning curve and one thing is certain: You can only control the process, not the outcome. With respect to investing, my observation is that women are more disciplined and willing to stay with a plan/course. Men will engage in the chase (of the latest trend) more readily, but anyone can get caught up in a mania if they have no self-control. As for trading (whether swinging or day-trading), men and women both fail or succeed equally in my opinion. I think forums such as this are populated by far more men than women, so we don't hear from women often enough to get a better sense of this. Three illustrations: 1) Barbra Streisand: Babs was the beneficiary of a market-gone-parabolic at its bull end-run (99-00). Who knows how she's fared since? She was certainly no less emotional than anybody else at the time. The word is that she started flipping the real estate market several years ago (at its peak), and the Chinese market more recently. 2) Leslie VanWinkle: In the June 2010 TA of Stocks and Commodities, Ms. VanWinkle penned a brutally candid article about her experience in the Forex Market. She writes that her biggest lesson was: "When reality replaces theory, all bets are off." 3) Another gal who was a customer of one of my businesses; she left the cutthroat business of real estate in the Phoenix/Scottsdale area in late 2006 after having done moderately well. She was an agent, but made more money flipping in the bubble. When it became apparent housing sales were slowing, she moved to a small place in the mountains. She was determined to parlay her assets in the Forex arena. Within a year, she moved back to the valley (almost broke) and had to go back into RE (sales) at the worst of times. None of these examples really matter much, I suppose. For every woman that fails or succeeds there are a proportionately similar number of men with the same experiences. The problems arise when generalities are assumed to be fact. S

Dammit man - I have to find my glasses. I was using values of 2 @ 5 and 11 @ 10... Mea culpa - again... ... thanks for the catch. I reckon this guy is going to be thoroughly conflicted because of me.:crap: That security (I still wonder what it was - not the NDX, I'm sure) blew right by the lower price objectives in that bull market/mania. S

I completely missed those two bottom prices. But, I can't make it out... aren't they 5 and 10? 260, 265, 270, 280... ... ... In any event, that would change the VC to 620 then. Mia culpa. S

That's a very good source of educational information. How long have you been following their work, Stock.Jock?

#1/ In principle of drawing point and figure chart, I don’t find how to draw chart if there are a “gap” in price action. Gaps are irrelevant in PnF chart construction. Charting follows a flow of two simple rules. You have to first ask if you can complete/add another box in the column you are currently in, IN the same direction. If not, the next question is whether or not you can switch columns and reverse the chart in the opposite direction enough to complete the reversal (whatever the reversal amount is). If you can’t add another box up or down, DO NOTHING. No action is recorded on the chart. Look at your chart and you will see it. You are only concerning yourself with the high or low of the price action for the period. HI and LO ONLY. Open and close values (or gaps) don’t matter. #2/ sometime, I see some number or character (not O or X) in point and figure chart, lease kindly tell me what is it? The numbers are “milestones” to indicate a point in time at which that particular box was filled. 1 through 9 represent the first nine months of the year, and A = October, B = November and C = December. #3/ in Vertical count price objective principle, the price object count as formula as below: I check an example there are 13 box but they use 14 box in formular, please kindly tell me why they do like thay Not certain I’m following this question correctly – I’m missing the distinction between the “13” and “14” values you mention. Can you clarify? There seems to be something missing. Also, the chart is highlighted with green and red columns to indicate the low and the reversal, then the yellow horizontal row. Did you do that or was it a part of the copy? The yellow level at 580 has “VU” in that row. Why? Aside from that, the green column contains 13 boxes with box-values of 10. This chart is a 3-box reversal chart. Using the instructions you inserted, the formula looks like this: 13 (boxes in the first reversal) x 3 (box reversal) x 10 (points per box)… … 13 x 3 x 10 = 390. Add 390 to the lowest value in the decline (the red column). 260 + 390 = 650. This is the same way Mike Burke of Investors Intelligence calculates his vertical counts. It can be calculated slightly differently, as well, but I hope that at least helps with your example. What was that chart you showed us? Let me guess - it was an index... technology or internet index of some sort?? Whatever it was, it bottomed in September of ’99 at 260, then rallied to 640ish in July and August of 2000 (on the 650 price objective!). Its last print was at 510 in September (the “9” was the last timestamp, so it had not had any action in October or there would have been an “A” somewhere in the figures…). Are you charting by hand at all? If not, you should. Don’t forget to clarify question #3. S

I noticed that - no worries. s

Thanks for the quick replies. Interestingly, I see that we are on the same page with respect to trends and scaling. The example with PTRAX is a very real one for me - it has been as much as a mid six-figure position in a retirement plan until recently. Unfortunately, the retirement plan has no SDBA (brokerage window). I began reducing it in early November and have every willingness to reduce it significantly more on rallies back toward the trendline. Since it's a blasted mutual fund (albeit a superior one), I had been queuing more off of the IEF - below - which is representative of the bond maturities within this fund: I'm a pretty convicted proponent of PnF relative strength, as well. Bonds have been strong, and I'd normally ride that horse until it went lame, but this name needs to have its profits protected and I'm doing so. The trend changes are obvious, but the magnitude is not - yet. I don't think the outcome will be good for those who have been aimlessly plowing money into fixed-income. Your thoughts are, well... thought provoking. Thanks.

Motorway (and others) - Happy New Year. I wonder if we are in agreement or disagreement and that I'm simply misunderstanding. I believe we are, but correct me if I'm wrong. Sometimes, there are more than twice as many reversals - sometimes not. It depends. Halving a chart of FITB from the April 2010 peak to present (from the "default" 1/2 pt. box values down to .25 pt) shows 12 and 26 reversals, respectively. Using the 1-box reversals amplifies that, just as we could expect. Also, reducing box sizes further - too far - is where we get the noise, sometimes unnecessarily. Unless it is a chart of CEF 7 or 8 years ago at $4.50ish, there's no need for that tight of a scale. (I used 1/16 and 1/8 pt. boxes while building a position in that name.) We agree, correct? In other cases, it's inescapable - you must scale way down: And finally, some useful, necessary information on the same name (at 2 cent box values!): [d][f1!3!.02!!4!20]&pnf=y"]http://stockcharts.com/def/servlet/SharpChartv05.ServletDriver?chart=ptrax,pluadanrbo[p][d][f1!3!.02!!4!20]&pnf=y In the example of FITB - or others in certain price ranges - I usually find little need for more than a couple box sizes, but I've always incorporated more than just one. I'm typically trying to find as much congruent information as I can with as short of a column/chart as possible. 2 or 3 different box values with both 1 and 3 box-reversals seems to offer that nicely. I have no problem with using percentage values for the box size - as long as the information is also "Goldilocks" for my bent/trading style. (Hence the "subjectivity" I mentioned early on). By the way, I took your lead and got more familiar with constructal law last spring. Fascinatingly beyond me. (Wish I had more time to learn. My life is more than half over - I must admit to being interested in having other things to learn now... such as how to be a human being instead of a human doing.) I enjoy your posts. Best. S

PQL111, This really doesn't fit in this thread (Wyckoff), but if you are swing trading, your task is much easier. Consider FITB (mkt close $14.16, only because it’s a chart I had open at the time; it’s one I don’t own, but it’s been on my list since summer and I may get into a position-trade on it): Follow Motorway’s cue - view it with default scales (currently ½ point boxes/3 box reversal method), then define them with smaller box values of .25, .125 and .0625. Next, change the reversal to 1 box, using the same box values of ½, .25, .125 and .0625. (These 8 views took me all of two minutes to accomplish.) A very different picture emerges which does NOT lag. You’ll find that the smaller two box values display similar information with either 1 or 3 box reversals (useful), while the larger two box values begin to differ more obviously (also useful, in a different way). The .0625 box even illustrates similar information with a 5 box reversal. You can include or exclude as much noise/volatility as you wish. Choose the scales and reversals that are best suited to the price of the name you are charting and the type of trading you are doing. (“Best suited” is subjective – it is something only you can determine.) Use a strategy like this alongside whatever screens you use to filter potential candidates, and whatever other log chart tools you employ for trade entry and management. Also, remember that none of this takes into account your assessment of market risk, for which I’m sure you have tools you use to evaluate. (Why trade long or short when the market doesn't support it?) With this simple methodology for swing trading, 2-3% monthly yields were normal for me with 5% being common. (Plenty have claimed/achieved monthly yields of 10% or more, but I have yet to see results like that maintained on a consistent basis except by a very, very few.)

Macrovector - you may not need other indicators. (Or, at least as many of the ones you are using.) It appears you've missed a lot of good information in this thread. For what it may be worth (as pointed out earlier), PnF was but one of the tools used by Wyckoff. Just one. For what it also may be worth, 20 years ago a senior engineer for a large, long-standing semiconductor firm - who was also a musician and ballroom dancer - became a client of mine. He had read Nicolas Darvas' book early on (I had too), he knew I used PnF and Wyckoff and - together - we did some pretty impressive things with his money. The market trend had/has as much, if not more, to do with success than the security's trend. Always remember that. (Think Booth School/Univ. of Chicago, circa 1969, here.) I've never been disappointed in the method, nor have others of my clients. Some, however, had incorrect expectations of it. I simply think Darvas was right - the boxes created an illustration of consolidation; of pent up supply or demand. He learned to act upon trends. As for me, I've never been able to use PnF to any superior benefit other than with swing- or position trading. Not saying that daytrading can't be done with it - I just found easier ways that suited my preferred style of activity. My goal has always been to hold a name for as long as possible (months- or longer, if possible), and PnF trends have been invaluable in that regard. The very slight resurgence in recognition PnF has received in the past decade or so is likely due (IMO) to the ease of incorporation into charting by way of automation (computers/the web). That does little to train a person. To truly learn its merits and understand its meaning, one needs to chart - by hand - 80 to 100 names a day (EOD) to see the relationships of supply and demand unfold and the message become clear. If you haven't done that for at least three years - by hand, you will not likely become a craftsman. You must see events unfold tens of thousands of times before you can reflexively respond. Wyckoff and others used figure charts for a reason, and - while applicable - it wasn't to trade E-mini contracts intraday. However, if you want a solution to your dilemma with "indicators", use side-by-side screens. Learning to chart by hand is a plus, as well - if you can keep up. Doing so will teach your mind to see "code" instead of blonds or brunettes. Personally, I think I'd set PnF aside for your intents and purposes.

TTT Fascinating discussion. This is the second time I've viewed this thread. I have some questions - on and slightly off topic... 1) Motorway, in an earlier post, you made mention of the 45 degree angles that more recent advocates of PnF chartists use. I'm unclear as to whether or not you feel they are valid within the confines of a PnF-only methodology. Could you spend a little more time on that matter? 2) I've always felt I had a reasonably strong grasp on PnF and would consider it my foundation with respect to RS and portfolio construction and risk management (Bullish Percents), not to mention that I've had great success swing and position trading with it. I agree that it is misunderstood. I'd like to admit I used it solely as my strategy, but that's not true. I learned vertical charts and volume studies first. After being mentored in PnF, however, I was encouraged to learn Wyckoff. (I did, but not as deeply as I should have.) Make no mistake - I still have an uncontrollable habit of mentally transposing bar chart data into a 3 box reversal PnF chart and remembering it that way. I'd like to know how many others have sort of "amalgamated" this craft with other forms of analysis. Anybody care to pipe up/chime in?? 3) Can this thread be resurrected? Others here who wish to keep the discussions ongoing? 4) I heard that Craig Schroeder had some setbacks... anyone aware of the latest with him? S